- ServiceNow posted Q2 revenue of $3.99 billion, up 24% YoY, beating the $3.93 billion consensus estimate [1] - AI annual contract value crossed $1 billion for the first time, with agentic deployments up ninefold in nine months [2] - The company raised FY2026 subscription revenue guidance to $15.76-$15.78 billion, implying 22.5% growth [1] - Shares rose roughly 6% on July 23 after declining approximately 35% year-to-date before the report [3] - Evercore ISI raised its price target to $160 and Jefferies to $140, both maintaining buy-equivalent ratings
[4] ServiceNow reported second-quarter revenue of $3.99 billion, a 24% increase from a year earlier, topping the Wall Street consensus of $3.93 billion and delivering one of the cleanest earnings beats in an otherwise punishing week for technology stocks [1]. Adjusted earnings per share came in at $0.90, above the $0.86 analysts had expected
.
[5]The headline number was the company's AI portfolio crossing $1 billion in annual contract value for the first time — a milestone that cements ServiceNow's position as one of the few enterprise software vendors demonstrating concrete AI monetization at scale [2]. Agentic AI deployments surged ninefold over the past nine months, and the company's AI Control Tower governance product has been adopted by more than 500 customers since its launch
.
[2]Shares jumped roughly 6% on July 23, a notable reversal for a stock that had fallen approximately 35% year-to-date heading into the print [3]. The company also raised its full-year subscription revenue guidance to $15.76–$15.78 billion, implying 22.5% growth, up from prior forecasts
.
[1]## The Numbers Subscription revenues, ServiceNow's core metric, reached $3.877 billion in Q2, up 24.5% year-over-year and 23% on a constant-currency basis [1]. Non-GAAP operating income was $1.173 billion, yielding a 29.5% operating margin
. Free cash flow came in at $634 million on a non-GAAP basis, a 16% margin
[1]. [1]Current remaining performance obligations — a forward-looking measure of contracted revenue — grew 21% to $13.2 billion. Total RPO hit $29 billion, also up 21% [1]. The company closed 123 deals exceeding $1 million in net new annual contract value during the quarter, a nearly 40% increase from the year-ago period, and ended June with 658 customers paying more than $5 million annually
.
[2]## AI Crosses the $1 Billion Mark The company's AI business hit a symbolic and substantive milestone: $1 billion in annual contract value, driven by rapid uptake of its agentic AI and AI Control Tower products [2]. AI Control Tower, which provides governance, cost tracking, and real-time monitoring for AI agents deployed across enterprise systems, surpassed 500 customers within six months of launch
.
[2]ServiceNow has been investing heavily in AI-native capabilities, including the $7.6 billion acquisition of cybersecurity firm Armis Security, the $1.2 billion purchase of Veza Technologies, and the integration of Moveworks' conversational AI technology [6]. CFO Gina Mastantuono said net new AI bookings exceeded internal expectations and that AI Control Tower is driving growth in security and risk offerings
.
[[5]](https://finance.yahoo.com/markets/stocks/articles/servicenow-now-q2-earnings-revenues-215507399.html)## Guidance Raised
For the full fiscal year 2026, ServiceNow raised its subscription revenue guidance to $15.76–$15.78 billion, representing approximately 22.5% year-over-year growth and 21% on a constant-currency basis [1]. The company guided for a non-GAAP operating margin of 31.5% and free cash flow margin of 35% for the full year
.
[1]For Q3 2026, the company expects subscription revenues of $3.975–$3.980 billion, an increase of 20.5% year-over-year [1]. Analysts currently project full-year EPS of $4.13 and revenue of $16.18 billion
.
[5]## Analyst Reactions Sell-side analysts moved quickly to raise price targets following the report. Evercore ISI analyst Kirk Materne lifted his target to $160 from $150, maintaining an Outperform rating [4]. Jefferies analyst Samad Samana raised his target to $140 from $135, keeping a Buy rating
.
[4]The beats come at a notable time for ServiceNow. The stock had been one of the sharper decliners among large-cap software names in 2026, falling roughly 35% year-to-date before earnings — significantly underperforming the S&P 500's approximately 10% gain over the same period [5]. The post-earnings move suggests investors see the AI traction as durable rather than incremental.
What's Next #
ServiceNow's results set a high bar for the rest of enterprise software earnings season. The company's ability to convert AI hype into measurable contract value — and to do so while maintaining operating margins near 30% — distinguishes it from peers still struggling to show AI-driven revenue upside.
The near-term test will be whether ServiceNow can sustain the pace of large-deal closings and AI bookings growth as it laps increasingly difficult comparisons in the second half. The Q3 subscription revenue guide of roughly $3.98 billion implies a sequential deceleration to about 20.5% growth, a sign that management is being measured in its outlook even as the AI pipeline expands [1].
Companies mentioned #
Further sources #
[1] ServiceNow Reports Second Quarter 2026 Financial Results — ServiceNow Newsroom ↗
[[2] ServiceNow beats estimates and raises outlook as AI passes $1B in bookings — Si… ↗](https://siliconangle.com/2026/07/22/servicenow-beats-estimates-raises-outlook-ai-passes-1b-bookings/)
[[3] ServiceNow (NOW) Shares Surge 5% Following Strong Q2 2026 Earnings — GuruFocus ↗](https://www.gurufocus.com/news/8974525/servicenow-now-shares-surge-5-following-strong-q2-2026-earnings)
[4] ServiceNow Analysts Increase Their Forecasts After Better-Than-Expected Q2 Earn… ↗
[[5] ServiceNow (NOW) Q2 Earnings and Revenues Top Estimates — Yahoo Finance ↗](https://finance.yahoo.com/markets/stocks/articles/servicenow-now-q2-earnings-revenues-215507399.html)
[[6] ServiceNow Q2 2026 earnings summary — Quartr ↗](https://quartr.com/events/servicenow-inc-now-q2-2026_3gnKgd4C)
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